Residential prop­erty price slide picks up pace in Q2

Greek residential prop­erty prices de­clined at a faster pace in the sec­ond quar­ter than the first, data showed yesterday, as Greece’s slide back into re­ces­sion hit house­hold in­comes and em­ploy­ment. Prop­erty ac­counts for a large chunk of house­hold wealth in Greece, which has one of the high­est home own­er­ship rates in Europe – 80 per­cent ver­sus a Euro­pean Union av­er­age of 70 per­cent, ac­cord­ing to the Euro­pean Mort­gage Fed­er­a­tion. Bank of Greece data showed that apart­ment prices fell 5.6 per­cent in the sec­ond quar­ter of 2015 from a year ear­lier. The an­nual pace of de­cline ac­cel­er­ated from 4.1 per­cent in the first three months of the year. The pace of price declines had be­gun to ease af­ter a 10.8 per­cent drop in 2013 up un­til the first quar­ter of 2015. Residential prop­erty prices have dropped 40.5 per­cent from a peak hit in 2008, when the coun­try’s re­ces­sion be­gan. The real es­tate mar­ket has been hit by prop­erty taxes which the gov­ern­ment im­posed to plug bud­get deficits, a tight credit mar­ket and a job­less rate hov­er­ing near 27 per­cent. Apart from their neg­a­tive wealth ef­fect, fall­ing prop­erty prices also af­fect the col­lat­eral value on banks’ out­stand­ing real es­tate loans.